Stocks Snap 5-Day Losing Streak, Led by Banks

Stocks closed higher Wednesday, helped by an upbeat start to earnings season and the Fed's latest Beige Book report, giving investors a chance to breathe a sigh of relief following a string of declines.

The Dow Jones Industrial Average rallied 89.46 points, or 0.70 percent, to close at 12,805.39, led by Alcoa and Bank of America.

The S&P 500 gained 10.12 points, or 0.74 percent, to end at 1,368.71, but closed below the 1,370 technical level for the second day. The Nasdaq advanced 25.24 points, or 0.84 percent, to finish at 3,016.46.

The CBOE Volatility Index, widely considered the best gauge of fear in the market, ended near 20.

All S&P sectors ended in positive territory, led by financials.

Despite the day's gains, some strategists warned that the rally may be fragile.

“The market’s run on expectation and sentiment—the data isn’t there to support the gains we’ve seen so far,” Michael Yoshikami, founder and CEO of Destination Wealth Management Advisors told CNBC's Power Lunch. “I think it’s time, at least for the short-term, to take some risk off the table…The market’s run about as far as it can run without getting more positive news.”

Still, others advised investors to buy the recent market dip.

“Concerns over the global risk and Europe seem to have been overdone,” said Doug Cote, chief market strategist with ING Investment Management. “Countries like Spain tend to underestimate their problems, while the global markets tend to overestimate.”

Cote added that the market will continue to be "supported by strong fundamentals."

The U.S. economy expanded at a modest to moderate pace in recent weeks, according to the Fed's "Beige Book" summary of national activity. Still, the central bank raised concerns that higher gasoline prices were beginning to worry producers and consumers across the country.

Alcoa rallied after the aluminum giant topped earnings and revenue estimates. Analysts had been expecting the Dow component to report a miss.

Google , JPMorgan and Wells Fargo are among major companies slated to post earnings throughout the week.

Banks were higher after a handful of upgrades. BofA gained after Guggenheim boosted its rating on the financial giant to "buy" from "neutral." Morgan Stanley also climbed after Evercore Partners raised its price target on the firm to $20.

Spring Stock Strategy

The Dow is bouncing back after suffering its worst trading day of the year. Discussing whether this is a sign of a market correction, with Michael Farr, Farr, Miller & Washington president and Michael Yoshikami, Destination Wealth Management Advisors.

Among techs, Apple ended lower after toggling between small gains and losses all day after the Justice Department filed an antitrust lawsuitagainst the company and a handful of publishers over alleged e-book price-fixing, according to reports. Separately, Sterne Agee raised its price target on the iPad maker to to $750 from $740.

Nokia plunged to a 14-year low after the Finnish cellphone maker lowered its quarterly outlook for its devices and services divisions, citing "competitive industry dynamics" that affected sales in emerging markets. Rival Research In Motion also traded lower.

Oil giant Chevron said it expects to outperform on earningsin the first quarter, according to its interim report. Still, shares were lower after UBS cut its price target on the company to $125 from $127.

Oil prices eased below $120 a barrel, trading traded near its lowest level in almost two months, pressured by rising inventories and concern over global demand. Menawhile, natural gas prices settled below $2 per million British thermal unitsfor the first time in more than a decade, putting pressure on names such as EQT , Chesapeake and Range Resources .

Homebuilders including Pulte, Lennar and DR Horton were sharply higher after Wells Fargo said in its recent note that 2012 may be the beginning of the recovery for the housing market.

J.C. Penney announced its CFO Michael Dastugue will leave the company. Current COO Michael Kramer will assume the CFO duties on an interim basis while the department-store chain searches for a replacement.

Treasury prices held their earlier losses after the government auctioned $21 billion in 10-year notes at high-yield of 2.043 percent and bid-to-cover of 3.08.

On the economic front, import prices rose 1.3 percent March, logging its biggest gain in nearly a year, according to the Labor Department. Economists polled by Reuters had expected import prices to rise 0.8 percent last month. February's data was revised to show a 0.1 percent decline instead of the previously reported 0.4 percent increase.

Weekly mortgage applications slipped last week as refinancing demand declined, according to the Mortgage Bankers Association.

European shares closed higher, putting a cap to a week-long slide, helped by gains in financials. Investors will be watching for Italy's bond auction on Thursday. The euro rose against the U.S. greenback after an ECB board member said the bank's bond-buying program remains an option as the euro zone continues to struggle to contain its debt crisis.

Meanwhile, investors will be keeping an eye on developments in Indonesia following a powerful 8.6-magnitude earthquake that hit the westernmost region of the country, triggering tsunami warnings in the area.